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Ari v. Duran

United States District Court, N.D. Illinois, Eastern Division

October 27, 2014

ARI OFFICER, Plaintiff,
v.
JOHN DURAN, STRATEGIC HWY HOLDINGS LLC, and ALL ROADS ENTERTAINMENT LLC, Defendants.

MEMORANDUM OPINION AND ORDER

GEORGE M. MAROVICH, District Judge.

Plaintiff Ari Officer ("Officer") filed suit seeking the return of the $250, 000.00 he invested with defendants John Duran ("Duran") and Strategic Hwy Holdings, LLC. ("Strategic Hwy").[1] Plaintiff has filed a motion for summary judgment to which defendants did not respond within the time allowed by the Court (or at all, for that matter). For the reasons set forth below, the Court grants in part and denies in part the motion for summary judgment.

I. Background

Local Rule 56.1 outlines the requirements for the introduction of facts parties would like considered in connection with a motion for summary judgment. As the Court notes on its website, the Court enforces Local Rule 56.1 strictly. To be considered, facts must be included in a party's statement of undisputed facts. Facts argued in briefs but not included in a party's statement of undisputed facts are not considered by the Court, because to do so would rob the other party of his or its opportunity to show such facts are disputed. Where one party supports a fact with admissible evidence and the other party fails to controvert the fact with citation to admissible evidence, the Court deems the fact admitted. See Ammons v. Aramark Uniform Services, Inc., 368 F.3d 809, 817-818 (7th Cir. 2004). This does not, however, absolve the party putting forth the fact of its duty to support the fact with admissible evidence. See Keeton v. Morningstar, Inc., 667 F.3d 877, 880 (7th Cir. 2012).

In this case, defendants did not file a response to plaintiff's statement of facts. The Court has carefully reviewed plaintiff's statement of facts and has deemed admitted only those asserted facts supported by deposition testimony, documents, affidavits or other evidence admissible for summary judgment purposes.

The following facts are undisputed.

Defendant Duran controls two limited liability companies: defendant Strategic Hwy and defendant All Roads Entertainment LLC ("All Roads"). As the person in charge, Duran has access to information about the assets and operations of Strategic Hwy.

Plaintiff Officer came to know of Duran through his acquaintance, Ted Sturiale ("Sturiale"). At some point before February 15, 2011, Duran told Sturiale that Duran owned equity in a company called Guerilla Union, Inc. ("Guerilla Union"), a company that produces music festivals. Duran asked Sturiale if he knew anyone who might be interested in investing. Sturiale mentioned Officer, who, according to Sturiale, was a musician and a futures trader. On February 15, 2011, Duran sent to Sturiale a Guerilla Union, Inc. Private Placement Memorandum (the "Guerilla Placement Memorandum"), which Sturiale, in turn, forwarded to Officer. The Guerilla Placement Memorandum stated that Duran owned 9, 000 shares of Guerilla Union stock. Sturiale put Officer in touch with Duran. On February 22, 2011, Duran and Officer discussed by telephone Officer's potential involvement.

Then, the plan changed. On March 10, 2011, Duran told Officer that Officer could not participate in the Guerilla Union private placement, because a company was going to buy the entire offering. Duran told Officer that Officer could still acquire an equivalent number of Guerilla Union shares by investing in Duran's holding company, defendant Strategic Hwy. On March 14, 2011, Duran and Officer spoke again. Duran told Officer that Strategic Hwy owned shares of Guerilla Union stock. Duran told Officer that Officer could invest in Strategic Hwy, which could then purchase additional shares of Guerilla Union.

On March 15, 2011, Duran sent Officer an email, attached to which was a draft "Convertible Note into Guerilla Union equity" that Duran offered to Officer in exchange for his investment. The draft stated, among other things, "This Note evidences a loan from Holder to the Company in anticipation of a potential investment by holder in Guerilla Union, Inc. (Guerilla Union'). The Company owns common stock of GU."

On March 17, 2011, Officer wrote to Duran with follow-up questions. Among other things, Officer asked for documentation that Strategic Hwy owned Guerilla Union, Inc. shares and whether the particular type of shares could be represented in the note. Duran responded that he would have his attorney include in the note the type of shares Strategic Hwy owned. As to documentation of ownership, Duran sent Officer a copy of Strategic Hwy's Operating Agreement, which stated, "The authorized capital of the Company consist [sic] of 9, 000 shares of Guerilla Union Corporation. The current market value of Guerilla Union is $1, 000 per share." The next draft of the note stated, among other things, "This Note evidences a loan from Holder [Officer] to the Company [Strategic Hwy Holdings, LLC] in anticipation of a potential investment by Holder in Guerilla Union, Inc. (GU'). The Company owns common stock (Series A2 or Founders Stock) of GU."

In reliance on Duran's representations that Strategic Hwy Holdings LLC owned Guerilla Union, Inc. shares, Officer wired $50, 000.00 from his bank account in Chicago to Strategic Hwy Holdings, LLC. Both parties signed a note (the "Note"). Duran signed on behalf of Strategic Hwy, listing his title as Managing Partner.

The Note states, in relevant part:

NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM ...

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